These proceedings arise out of breaches of fiduciary duty and inadequate disclosures by registered investment advisers Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC in connection with mutual fund share class selection practices and the fees Respondents received pursuant to Rule 12b-1 under the Investment Company Act of 1940 (“12b-1 fees”). At times during the period January 1, 2014 to July 31, 2015 (the “Relevant Period”), Respondents purchased, recommended, or held for advisory clients mutual fund share classes that charged 12b-1 fees instead of lower-cost share classes of the same funds for which the clients were eligible. Respondents received 12b-1 fees in connection with these investments. Respondents
withheld information with the intent to deceive in their Forms ADV or otherwise the conflicts of interest related to (a) their receipt of 12b-1 fees, and/or (b) their selection of mutual fund share classes that pay such fees. During the Relevant Period, Respondents received 12b-1 fees for advising clients to invest in or hold such mutual fund share classes.